The story made national headlines yesterday as a key component of the president’s middle class economic agenda faced stiff headwinds from both parties in Congress. From BloombergBusiness:

The current administration unsuccessfully tried to sell the idea as a way to redirect aid from upper-middle-class families toward people with less income who otherwise couldn’t afford college.

“You could have seen this coming seven miles away,” said Dean Zerbe, national managing director of alliantgroup, a tax advisory firm based in Houston. “You’re putting your hand into a raccoon sack if you’re going to get involved with it.”

The administration’s proposal would have ended the tax-free status of money withdrawn from 529 accounts to pay for college. A 529 Plan is a tax-advantaged education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs.

According to NBC News, the Government Accountability Office found in a 2012 study that fewer than 3 percent of Americans were saving in a 529 and that the median income of families with 529 plans is $142,400, compared with a median income of $45,100 for other families.

In his 2015 State of the Union address, the president suggested removing the tax free distributions of 529 plans, presumably affecting only new contributions. From the BloombergBusiness article:

The president and his advisers may have been able to advance the proposal if they had built a case against the 529 break as part of a broader tax-code plan and a strategy to address college costs, Zerbe said.

Dean Zerbe is alliantgroup’s National Managing Director and served as Senior Counsel and Tax Counsel to the U. S. Senate Finance Committee. Zerbe worked closely with then-Chairman of the Finance Committee, Senator Charles Grassley (R-IA), on tax legislation. During his tenure, he was involved in all major tax legislation signed into law.

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